ETSU facing budget reductions

Nathan Baker • Apr 17, 2014 at 9:16 PM

Flat higher-education funding in Gov. Bill Haslam’s $32.4 billion budget approved by state lawmakers last week could mean more belt-tightening for East Tennessee State University and increased tuition and fees to students next year.

Citing lower than expected revenues, the governor’s amended budget reduced recurring general funding to the state’s public universities, community colleges and technical schools by .3 percent, instead of the $29.6 million recommended by the Tennessee Higher Education Commission during the budget process.

For a majority of the schools under the Tennessee Board of Regents system, the stagnant appropriations materialize as a budget reduction under the outcomes-based funding formula implemented four years ago under the Complete College Tennessee Act.

The funding model, intended to steer higher education appropriations away from an enrollment-based mechanism and emphasize degree attainment and student progression, means ETSU will receive $1,057,200 less from the state for recurring expenses next year than it did this year.

ETSU Vice President of Finance David Collins said a fixed cost component based on the amount of floor space a university occupies threw the formula out of balance this year.

A new science building at Middle Tennessee State University helped to draw funding to that school and away from most of the others, he said.

By holding the line on state funding, MTSU and Austin Peay State University each received an additional $1 million, but the other four-year universities in the TBR system lost a combined $3.5 million.

“It certainly hurt us, but by how much will be up in the air,” Collins said. “Most likely it will translate to fee increases or further reductions we have to make. It starts us out at $1 million less than last year.”

Enrollment at ETSU has fallen for two straight years, draining millions from the university’s operating budget and resulting in austerity measures, including a hiring freeze and a 1.5 percent across-the-board cut, implemented by President Brian Noland.

Collins said the declining proportion of funding contributed by the state puts the cost of higher education more heavily on the back of students, and universities are more drastically affected by enrollment swings.

“Like we’ve said many times, 10 years ago the state funded 70 of our costs and tuition and fees funded 30 — now that’s exactly reversed,” he said. “We have become much more like a private school now. We used to not have to worry as much about the rise and fall of enrollment, but now, 1 percent plus or minus makes a huge difference in the budget.”

According to figures from TBR Vice Chancellor for Business and Finance Dale Sims, the funding from the state for full-time equivalency students has fallen by nearly a third since 2008.

During a meeting with board members Thursday to discuss the fiscal shortcomings, Sims said THEC initially recommended a 2 to 4 percent increase in tuition and fees for the state’s colleges, but that was assuming the $29.6 million funding increase the commission recommended.

The options available to colleges to fill the gap left by falling state contribution -— either reduce expenses on academics and programming or increase tuition and fees — both have negative effects on the student population, Collins said.

“About 70 to 80 percent of our students are on student aid, and a lot of those are loans,” he said. “As prices increase, so does the amount they have to borrow and the amount of time it takes for them to pay it off after they graduate.”

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